First Posted: 4/3/2015
Casinos aren’t quite the safe bet state officials hoped they’d be.
They’re seeing decent returns, even though they are about half of what was expected. Now one state senator proposes a change he thinks will push the casinos to live up to their expectations, by taking away nontaxable freebies casinos use to get people in the door.
Earlier this week, state Sen. Bill Coley, R-West Chester, made the proposal. He noted the casinos aren’t living up to the promises of $500 million in local taxes per year for schools and local governments. Indeed, it peaked at $272 million in 2013.
He looks at the “promotional gaming credits” the casinos use and sees a loophole worth closing. These are the promises of $10 to $20 in free plays at the casino, in hopes of getting people in the door. They seem to be popular: The casinos have deducted about $500 million worth of them since mid-2012. Using rough math, Coley figures that’s $165 million that didn’t go to Ohio schools and local governments.
He noted other states, such as Michigan, don’t offer promotional gaming credit exemptions from taxes. He doesn’t think Ohio should either, until the casinos live up to their promises on number of seats, jobs created and taxes paid.
“Our schools and local governments have been counting on the gaming revenues that they were promised,” Coley wrote in a column. “It’s time that the principles set forth in the proposed legislation are enacted into law.”
To this gamble, we say let the current system ride. Now’s not the time to double down on taxing casinos for making overly rosy projections.
Coley’s solution is too simple and ignores basic economics. If the casinos truly needed more machines and workers, they would’ve already built them. Anyone who’s visited one of Ohio’s four casinos or seven horse-track racinos can tell you that’s not a problem on an average day. It’s not as if there are lines of people waiting at each machine.
The market should decide how many machines are at a casino, not some legislative action aimed to live up to optimistic projections from half a decade ago.
It also ignores the fact Ohio is getting something extra out of these promotional credits. In July 2011, Gov. John Kasich signed a law allowing these credits, as part of an agreement that casino operators would pay Ohio an extra $110 million over 10 years. If Coley’s plan were approved, those payments stop.
“The proposal, if implemented, could wind up producing the opposite of what Sen. Coley indicates he’s trying to achieve,” Eric Schippers, a senior vice president for Penn National Gaming, which runs Hollywood casinos in Columbus and Toledo, told the Columbus Dispatch.
Legislators need to stop focusing on the promises made during the campaign to allow casinos into Ohio. You’d think politicians, of all people, would understand sometimes people exaggerate on the campaign trail to get voters on their side.
We need to look at these casino revenues for what they are: Additional money these local governments wouldn’t have if it weren’t for the casinos. No, it’s not as much as it was expected to be. No, it’s not a reliable revenue stream. It is, however, an extra allotment that gives struggling local governments and schools a little breathing room to tackle projects.
In other words, we didn’t hit the jackpot, but we still came home with more than we started. That’s still a pretty good day at the casino.
